Boeing could test tax-break assumptions: Editorial

Location, location, location. Living in Southern California, distinguished by beautiful weather and soaring rents, we know the adage about what matters in property.

Boeing does too.

Now a couple of economists are floating the idea that states should consider this before they start tripping over themselves to offer corporate tax credits to big companies like Boeing.

The company got a lot of states and cities, like Long Beach, pretty excited this year with the possibility of moving 777X production to their locales after machinists in Washington rejected a contract that would have kept production in the Northwest.

The move would bring thousands of middle-class jobs and an economic lift after some pretty down years.

Suddenly, legislatures rushed to put together billion-dollar packages to lure Boeing, which is supposed to decide by early next year where it will place its production.

Washington legislators came up with $9 billion in incentives, Missouri created a $1.7 billion package, and the challenge of attracting Boeing rallied politicians around the country. In all there were 22 states eager to lure the aerospace giant, California among them, although the Golden State has been tight-lipped about what its offer included.

Amid the courting, one Boeing executive joked, “I’m the most popular guy in the country right now,” The Washington Post reported.

The tax incentives and rush to bring Boeing come from the notion that cutting taxes will help keep big companies in state and wages high.

We agree. It’s why the economists argue that even a small increase in taxes might do little to deter a high-tech firm from going to Silicon Valley.

In California, Rep. Alan Lowenthal got 46 other members of Congress to pitch Boeing CEO W. James McNerney Jr. and make just that argument.

“In Long Beach, all of the necessary infrastructure already exists and is ready to be used to support the 777X production. From deep water ports to robust rail and highway access, Southern California’s transportation infrastructure functions exceptionally well, as demonstrated by the current production of the C-17,” said the letter to McNerny.

What Lowenthal and his colleagues were essentially saying is that we have something that other places don’t. Long Beach is the only U.S. location outside Puget Sound, Wash., with such a long legacy of building big airliners.